India, Sri Lanka in new push to boost trade, tech tie-up

October 25, 2016 — INDOLINK Consulting (es)

Source: LiveMint.com, Oct 24, 2016

New Delhi: India and Sri Lanka will seek to narrow differences early next week over an ambitious pact that seeks to widen economic engagement between the two neighbours and holds the potential for increased cooperation with South-East Asia.

Indian foreign secretary S. Jaishankar, who left for Colombo on Saturday, is expected to push the early conclusion of the Economic and Technology Cooperation Agreement (ETCA), that aims to boost cooperation in technical areas, scientific expertise and research among institutions, boost standards of goods and services and improve opportunities for manpower training and human resource development.

“Foreign secretary is going to Colombo over this weekend to discuss economic cooperation with Sri Lanka and to pursue the various initiatives and ideas that were discussed during the two high-level visits that we recently had,” Indian foreign ministry spokesman Vikas Swarup said, referring to the visits by Sri Lankan President Maithripala Sirisena and Prime Minister Ranil Wikremesinghe last year as well as this year.

Wickremesinghe, during a visit to New Delhi earlier this month, said he and his Indian counterpart, Narendra Modi, had agreed to conclude ETCA by the end of this year.

The announcement comes against the backdrop of opposition to ETCA from several quarters in Sri Lanka.

Many in Sri Lanka’s political opposition see it as an attempt to “foreignise” the island nation’s economy and have demanded that the shortcomings in the existing free-trade pact be sorted out before concluding a new deal, according to news reports from Sri Lanka.

They view it as advantageous to India and inimical to Sri Lankan economic interests, the news reports say.

India and Sri Lanka first concluded a free trade pact in the late 1990s that initially increased Sri Lankan exports to India but later Indian exports to the island nation began surpassing imports to India, said Biswajit Dhar, a professor of economics at the New Delhi-based Jawaharlal Nehru University. Bilateral trade at present is around $4.6 billion, of which almost $4 billion consists of Indian exports to Sri Lanka.

“One of the fears expressed by the Sri Lankan side is that there are political forces and middle-class interest groups such as doctors and IT professionals who feel that signing ETCA would mean Indians would come to dominate these sections of jobs in Sri Lanka,” said a person familiar with the developments who did not want to be named. “These groups have been fuelling anti-India sentiments in Sri Lanka mainly due to their opposition to the deal.”

Since being elected to office last year, the Wickremesinghe government has spoken in favour of an economic programme that includes the liberalization of trade and capital flows.

In New Delhi earlier this month at the Indian Economic Summit on 6 October, Wickremesinghe supported ETCA saying that when signed, it offered a strategic economic advantage to Sri Lanka and the fast-growing southern Indian states.

At a press conference in New Delhi a day earlier, Wickremesinghe told reporters that ETCA with India was more ambitious than Sri Lanka’s economic cooperation with China which includes infrastructure projects. “What we are talking with your government is much bigger. When ETCA is signed, Sri Lanka and the five Indian (southern states) can work together. As it is, we are an economy of $500 billion which is the size of Sweden,” he said, adding these were fast-growing areas and “we can make it into $1 trillion”.

China’s presence in Sri Lanka and Colombo’s signing onto the sea component of Beijing’s ambitious One Belt-One Road initiative – known as the Maritime Silk Road – has made New Delhi wary. The “Road” involves the development of ports and shipping routes connecting Chinese harbours to Europe and the South Pacific.

Wickremesinghe, during his visit, also pointed to economic opportunities that could be exploited among India, Sri Lanka and Singapore, given that India and Sri Lanka would be signing the ETCA soon, that there is a Comprehensive Economic Partnership Agreement between India and Singapore and Sri Lanka and Singapore had recently launched talks on a free trade agreement.